4 Things to Consider Before You Put Your Industrial Business Up for Sale

Posted on 07 Jul 2022

4 Things to Consider Before You Put Your Industrial Business Up for Sale

Establishing a business takes years, if not decades. You work and toil day in and out to achieve your dream, and you even accomplish it.

But now something’s changed; you feel the urge to expand your horizon or want to retire and try something new. Whatever your reasons for wanting to put your industrial business for sale, selling it doesn’t have to be challenging. Therefore, we have identified four key points to assist you to get maximum value for your business.

1. Business Valuation

Several buyers request valuation certificates, making it even more important to have one when selling your business. Because the valuation document is the single most critical piece of information about your company, it must be comprehensive and accurate. A professional valuation of your manufacturing unit would necessitate the following:

· Federal Tax Returns documents of the last 3 years

· Last 3 years' profit and loss statement along with balance sheets

· Year-to-date comparison and interim profit and loss statement, including a balance sheet.

· Average inventory value of the saleable product on hand at any time of year

· List of equipment

· Copy of real estate tax bill, if real estate is part of the sale

· A copy of any available real estate appraisal

· Lease information

2. Tidy Up the Manufacturing Unit

You only have one chance to make a first impression, so make it count! A poorly maintained manufacturing unit would undoubtedly deter potential buyers.

Buyers will inspect every aspect of your industrial unit, and their exploration may lead them into an unknown location, injuring them and your business’s selling value. So, before inviting buyers for a tour, clean and repair your facility. You might be surprised by what you find.

3. Manage Your Financial Records

A prospective buyer would like to know about the financial condition of the manufacturing unit, and how profitable it is for them. They would want to see your production and operation records and financial reports.

Maintaining all the records from credit history, tax returns, manufacturing reports, and scrap records to ongoing production reports, makes it easier for the buyer to make an informed decision. Plus, clean financial reports not just show your confidence but also speak volumes about the way you conduct your business.

4. Be Compliant with Environmental Laws

Savvy buyers will not want to see that your facility is in compliance with health and safety but also with environmental laws in your state or county, and that it will remain in compliance after the deal is done.

Compliance with environmental laws is more important than ever in manufacturing. With the ecology movement and more environmentally conscious consumers, it is in the best interests of buyers to ensure that they are purchasing an environmentally friendly and sustainable business.

Given this trend, you must be more proactive to maximise the value of your business. That includes adhering to constantly changing regulations and using environmentally friendly materials in your manufacturing.

Environmentally-conscious buyers will also want to see your certification or compliance records, including toxic waste removal records.

Ensuring that you take care of all of these will significantly increase the value of your company.

It would be best to analyse your manufacturing company's operations as if you were a buyer. Consider what the risks of this business are? What concerns would a buyer have during due diligence, and what can you do before putting your industrial business for sale? Want to know more, contact us and we would be happy to help you.